The Eastern Caribbean Central Bank (ECCB) is encouraging citizens of and residents in the Eastern Caribbean Currency Union (ECCU) to remain calm, in light of the news of an agreement that will see Trinidad-based Republic Financial Holdings Limited acquire the Bank of Nova Scotia’s (Scotiabank’s) operations in nine Caribbean territories.
The territories are St. Maarten, Anguilla, Antigua and Barbuda, Dominica, Grenada, Guyana, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines.
In a statement issued on December 1, ECCB said it received an application from Republic Financial Holdings on Tuesday, November 27, “seeking regulatory approval to acquire the Bank of Nova Scotia’s operations and businesses in the ECCU,” and that it has since commenced a review of this application, pursuant to the Banking Act.
“In this regard, the ECCB has held initial discussions with the Central Bank of Trinidad and Tobago and the Bank of Guyana. These regulators will collaborate on the review of this application. The ECCB will also confer with the Central Bank of St. Maarten and Curacao,” the ECCB statement added.
The ECCB noted a change in ownership of banks is not uncommon. It said the proposed transaction is the latest in a series of consolidation moves by Canadian banks.
The ECCB said, “Citizens and residents in the ECCU should come to expect these developments as part of the banks’ response to both global developments and competition in the ECCU banking space. Indeed, the ECCB continues to encourage indigenous (national) banks to cooperate and consolidate to ensure the interests of the people of the ECCU are best served.”
Addressing concerns about the ownership of banking assets in the ECCU, as a result of the proposed acquisition, the ECCB said, “At present, 55 per cent of banking assets are owned by three Canadian banks and Republic Financial Holdings and 45 per cent of banking assets are owned by indigenous (national) banks. The proposed acquisition, if approved, would not fundamentally change that ownership distribution, as 55 per cent of the banking assets would be owned by two Canadian banks and Republic Financial Holdings and 45 per cent of the banking assets would continue to be owned by our indigenous (national) banks.”
Commenting on the situation, St. Kitts and Nevis’ Prime Minister and Minister of Finance, Dr. the Honourable Timothy Harris, said that, “The matter is being studied and is not yet ready for decision-making, in that it has to be discussed at the Monetary Council level where additional information will be provided to the decision-makers based on the analysis of the regulators.”
Dr. Harris also shared similar sentiments to those expressed by the CCB in that persons should remain patient “as the due processes will have to occur, after which a decision will be made taking into account the best interest of the Currency Union, which is the collective responsibility of the Monetary Council.”
The Republic Group’s total asset base as at Sept. 30 stood at US $10.5 billion, with equity at US $1.5 billion and profits attributable to shareholders for the year ended Sept. 30 of US $198 million.
It was also noted that the ECCB already regulates Republic Bank, since it has an operation in Grenada and a stake in a bank in Saint Lucia.